- 49% of pending orders are to buy the Pound.
- 51% of traders still hold short positions
- Immediate resistance is at 1.3037
- The closest support is at 1.2934
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Upcoming events: BoE Inflation Report, BoE Official Bank Rate, UK NIESR GDP Estimate, US PPI and Core PPI, US Initial Jobless Claims
The US Import Price Index managed to post a larger-than-expected gain over the course of April, official data revealed on Wednesday. The US Bureau of Labour Statistics reported that the price index for US imports tacked on 0.5% in April, following the upwardly revised 0.1% uptick registered in the preceding month and beating analysts' expectations for a 0.2% increase. April's surge was mainly driven by higher fuel prices, which rose 1.6% over the month of April, following a 0.9% drop observed in March. A 1.6% hike in prices for petroleum and a 4% advance in natural gas prices appeared to be the main contributors to the increase in fuel prices.
In the meantime, the price index for imports excluding fuel rose 0.3% in April, following an increase of 0.2% posted in the previous month. As reported by the US BLS, higher prices for food and beverages, industrial supplies and materials as well as an uptick in feeds managed to bolster the overall acceleration in nonfuel prices. Over the year, prices for US imports soared 4.1% in April, while export prices inched 3% higher over the same period.
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UK NIESR GDP Estimate and US PPI
With the UK Manufacturing and Industrial Production data already released, further focus could be turned to the BoE's Interest Rate Decision and Inflation Report. The Report and the Minutes could provide the Pound with a significant boost, while later on the NIESR GDP Estimate is to be released, which is an estimate of growth over the last three months up to the report which comes out a month before the official announcement. This report is highly reliable and would influence the UK monetary policy. As for the US side, the PPI and Core PPI are the most important events. The PPI measure the average changes in price in primary markets of the US by producers of commodities in all states of processing. Changes in the PPI are widely followed as an indicator of commodity inflation. The Core PPI, however, exclude the Food and Energy sectors. .
Read More: Fundamental Analysis
GBP/USD attempts to break away from weekly PP
The Cable remained completely flat on Wednesday, although some upside volatility was registered. The Pound has been consolidating against the US Dollar for quite some time now, but with the bullish momentum moderately prevailing. According to technical studies, the Sterling should continue outperforming the US Dollar, with demand at 1.2934, represented by the weekly PP, remains sufficient to keep the pair afloat, and no resistance is preventing the exchange rate from climbing over the 1.30 level. The overall ceiling for now is the area circa 1.3130, where a number of supply levels coincide with the ascending channel's upper boundary.
Daily chart
The GBP/USD currency pair kept finding support at the 200-hour SMA yesterday, but the outlook of the hourly chart remains unchanged – the pair still risks retesting the channel's lower boundary near 1.2870 this week. Today's fundamental data is likely to shine more light on the possible exchange rate direction.Hourly chart
Read More: Technical Analysis
Traders remain neutral
Market sentiment remains unchanged, with 51% of all open positions being short for the fifth consecutive time. At the same time, the share of purchase orders slid from 58 to 49%.
A less optimistic situation is observed elsewhere. The sentiment at OANDA remains bearish, namely 64% of all open positions are short and the remaining 36% are long. Meanwhile, sentiment at Saxo Bank slightly improved, but still remains strongly bearish, with 61% of traders now being short and the other 39% - long on the Sterling against the US Dollar.
Spreads (avg, pip) / Trading volume / Volatility
Traders still indecisive
© Dukascopy Bank SABy the end of the next three months traders believe the Cable is to rise above the 1.30 major level, as 59% of survey participants believe so. While the current price is around 1.29, the average forecast for August 11 is 1.3027. The 1.32-1.34 range is now the most popular price interval, having 17% of the votes, while second comes the 1.30-1.32 interval with 15% of the voters, and the third place is tied by 1.28-1.30 and 1.34-1.36, with 12% of poll participants choosing either option.